NOTE RAPIDE. As the driver of the national economy and the gateway to a globalised and competitive world, DYNAMICS OF THE PARIS REGION ECONOMY

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1 NOTE RAPIDE PARIS REGION DEVELOPMENT AND URBAN PLANNING INSTITUTE #6 Sylvain Cambron/Cbre ID ECONOMY May million JOBS IN THE PARIS REGION IN % OF NATIONAL GDP 944,000 COMPANIES DYNAMICS OF THE PARIS REGION ECONOMY THANKS TO DYNAMIC NETWORKS, INNOVATION, CULTURAL CREATIVITY AND HUMAN SKILLS, THE PARIS REGION HAS A POWERFUL, HIGH-PERFORMING ECONOMY. HOWEVER, IN ADDITION TO MANAGING THE 2009 CRISIS, IT HAS HAD TO FACE THE NUMEROUS CHALLENGES ARISING FROM DEEP TRANSFORMATIONS IN ITS ECONOMY, SUCH AS INCREASED INTERNATIONAL COMPETITION, SOCIAL AND ENVIRONMENTAL ISSUES AND THE WIDESPREAD EXTENSION OF DIGITALISATION. As the driver of the national economy and the gateway to a globalised and competitive world, the Paris region plays a very special role in France. The source of its economic dynamism is its exceptional openness, but paradoxically this has also intensified the economic and geographical transformations and the rise in social inequality, as evidenced in a study by the Paris Region Development and Urban Planning Institute [IAU îdf, 2016]. Since the early 2000s, the Paris region s economy has had to tackle simultaneously one of the most serious economic crises of the last 50 years as well as deep economic and societal change. The effects of what has occurred during this special period are immediately visible across the Paris region, from the core city centre to the rural outer ring, including the areas earmarked for the development of the future Grand Paris Express metro network. The list of these effects is long: the blossoming of start-up factories ; the emergence of new office districts and business parks; the development of new cultural amenities; and the setting up of methanisation units in the region s farms. This dynamic has opened up many opportunities, but has also given rise to the challenges of increasing poverty in the Paris region, the adverse impact of business closures, including that of iconic locations such as the Peugeot car plant in Aulnay and the social difficulties the inhabitants of the Paris region face in certain rural districts or areas. THE ECONOMY OF A GLOBAL CITY REGION The Paris region s economy is powerful at national, European and world levels. It is home to 19% of the population of France, represents 22% of the total number of jobs in the country and generates 31% of French gross domestic product (GDP). It accounts for 4.7% of Europe s GDP and 7% of Europe s R&D expenditure. Various classification systems rank the Paris region among the top

2 Note rapide #6 May 2017 Xavier Schwebel/Picturetank Arnaud Bouissou/MEDDE-MLETR REGIONAL ECONOMIC, INNOVATION AND INTERNATIONAL DEVELOPMENT SCHEME (SRDEII) Since the reforms aimed at decentralising the state in recent years, the regions have been under the obligation: to draw up a plan that sets their strategic aims in terms of support for businesses; to draw up a regional strategy for supporting small and mediumsized enterprises as well as intermediate sized companies; to formulate a regional plan to internationalise businesses by setting export development objectives; and to develop a regional innovation strategy. The Paris region has therefore drawn up its regional economic, innovation and international development scheme (SRDEII). The regional council voted in favour of its Regional growth, employment and innovation strategy on 14th December This strategy has four main objectives: Investing in the attractiveness of the Paris region Developing the competitiveness of the Paris region s economy Developing entrepreneurship and innovation in all parts of the Paris region Acting collectively at the service of companies, employment and all parts of the Paris region. To learn more, go to: five most competitive regions in the world. Several indicators highlight this position. The Paris region represented 6.2 million jobs in 2015, as many as the Los Angeles metropolitan area, and is ranked second in Europe in terms of the number of foreign businesses; it is also home to 944,000 companies and over 106,600 researchers; finally, it accounts for 40% of France s national R&D expenditure. The Paris region s attractiveness also owes much to its wealth of cultural and tourist assets, featuring world famous sites and events. In 2016, the number of overnight tourist stays (for business and leisure) amounted to million euros. The annual influx of young workers or students (80,600 people from 18 to 29 year s hold in 2012) reflects the vitality of the labour market and the presence of 16 universities and 60 top-ranking higher educational establishments. Our study has highlighted the dynamism of the region s networks, drivers of innovation, cultural creativity, highly qualified workforce, high quality of commercial property and infrastructures. This attractiveness capitalises on the renown of the capital, internationally recognised hubs such as the city of Paris itself, Greater Roissy, La Défense or Paris-Saclay, but also on numerous sub-regions, which contribute to the good functioning, high performance and diversity of the regional economy. THE ECONOMIC CRISIS HAS HAD A CLEAR IMPACT Over the last 10 years, the regional economy has been impacted by two major developments: the economic crisis and profound long-term transformations. In , the crisis adversely affected all the regions of France, leading to drops in GDP and employment and, conversely, to increases in the number of job-seekers and the unemployment rate. The decline in employment was slightly slower in the Paris region (-0.6% on average per year) in 2008 and 2009, compared with -0.7% in the provinces. Unemployment also increased at a slower pace: between early 2008 and the third quarter of 2016, regional unemployment rose by 2.5 points compared with three points on average in the rest of France. Since this crisis, and against a background of weak growth, the Paris region has evolved more favourably than the other regions. Between 2009 and 2015, employment increased by 0.6% a year on average (0.4% in the rest of France). At the end of 2016, there were over 972,000 job-seekers in the Paris region, 42% of whom were longterm unemployed workers. The unemployment rate in the Paris region is 9.1% and 10.2% in the rest of France 1. Poverty now affects 15% of the population, including new categories of people. Inequality is high. Geographical contrasts are considerable and have tended to worsen due to the crisis. The Paris region is home to the two richest counties (départements) in France - les Hauts-de-Seine and the city of Paris - and to the poorest in terms of per capita income, namely la Seine-Saint-Denis. PROFOUND TRANSFORMATIONS THAT CREATE MORE WEALTH THAN JOBS Over the past few years, the Paris regional economy has continued to experience the changes that began in the 1990s: growth in services, decline in production activities, move upscale of activities and jobs and stronger GDP growth compared with employment. Thus, between 2000 and 2015, employment in the services sector increased by 512,000 jobs (+10% over this period), whereas jobs in the industrial sector declined by 155,000 jobs (-25% over this period). In all the large regions of France, the increase in GDP has been greater than in employment. Annual change in employment trends in the Paris region (%) in the Paris region Rest of France source: National Institute for Statistics and Economic Studies, Estel, total employment

3 Note rapide #6 May 2017 Laurent Mignaux/Terra Christopher Salgadinho Over a 10-year period ( ), self-employment accounted for 40% of job growth +195, Self-employment Comparative trends in GDP and employment in the Paris and the rest and of France, Comparative trends in GDP and employment in region the Paris region the rest of France, Base 2000 = GDP in GDP rest of France Comparative trends in GDP and employment in the Paris region and the rest of France, Base 2000 = Jobs rest of France GDP in Jobs in source: National Institute for Statistics and Economic GDP Studiesrest Jobs rest of France of France Salaried employees 5 locate in more urban and central areas: 80% are in Over a 10-year period ( ), the heart of the Paris agglomeration. self-employment +0.9 cant in the Paris region than in the rest of France due The impact of the digital industry goes beyond these accounted for 40% of job growth to the greater presence in the Paris region of high activities because the whole of society is being +195,600 and less +0.4 labour-intensive actransformed by the digitalisation process: gene value-added activities +0.2 tivities. In 2015, ralisation of the use of digital technology, arrival of +0.1 reached 105,500 euros +0.1 GDP per job source: National Institute for Statistics and Economic Studies, Estel in the2011paris2012 region, against 70,700 euros in the rest new entrants to traditional markets such as taxis, ,100 of France. This gap has continued to widen. digitalisation of manufacturing processes and serannual change in employment trends vice provision, etc. + + Rest of France in the Paris- region Digitalisation is deeply transforming the Paris re+0.9 DIGITALISATION, GREENING OF THE ECONOMY gion and the presence of a strong digital sector, sup source: National Institute for Statistics and Economic Studies, AND SELF-EMPLOYMENT ported by several competitiveness hubs and clus Estel, total employment +0.4 Although developments in the Paris region s ters, such as Cap Digital, Systematic or Opticsvalley, eco+0.2 nomy have been structurally impacted by +0.1 the is a real asset for the capital city region source: National Institute for Statistics and Economic Studies, Estel unchanging factors2010 just reviewed, they have2014 also been influenced by certain deep transformations, The ecological transition on the march -0.3 which are now perfectly visible and measurable. The transformation of consumption patterns and + + Rest of France -0.5 production methods to make them less polluting 512,600 jobs -0.9 in -0.8 the digital sector and more energy-efficient has begun. In this area In 2012, the digital sector,source: at National the interface between Institute for Statistics and Economic Studies,too, the Paris region has real potential: it is estiestel, total employment the ICT and creative industries, represented mated that the green economy in the Paris region 512,600 jobs in the Paris region, 30% of which in relies on 246,000 professionals operating in sectors computer programming and IT consulting. at the heart of the green economy or in those that Between 2007 and 2012, employment in the digiare introducing these skills to modify their business tal economy increased slightly (+1.4%, compared models and practices. At the same time, the greewith +1.9% in all sectors). The digital sector stood ning professions, which incorporate environmenout from the others by recording a greater increase tal skills without having any direct environmental in the number and presence of non-salaried, selfpurposes, are estimated to represent 744,800 jobs. employed, freelance and independent professionals Although still greatly dependent on state support, and entrepreneurs: 12% compared with 9% on avethe ecological transformation process is a great rage. Digital companies also stand out by seeking to opportunity for job creation, as much in the sectors Self-employment 2009 Salaried employees +130,100 ual change in This employment trends gap increased in the 2000s, even more so in the e Paris regionparis region. This situation has been more signifi-

4 Note rapide #6 May 2017 Global city region key figures 80,600 young people from 18 to 29 year s old in 2012 MONDE EUROPE FRANCE Main customers : Europe, United States 84 billion Exports Transports 3 airports 7 High-speed train stations Office space 52.8 million sq.m. 6.2 million jobs Exhibition surface area 700,000 sq.m. 143,600 company creations competitiveness 8 clusters universities elite schools 944,000 companies Warehouses 17 million sq.m. 106,600 researchers Tourism million overnight stays Labour pool 350,000 entrants Imports Foreign investments foreign 216 companies 8,000 created or maintained jobs (average/year between 2005 and 2013) 138 billion Main suppliers : Europe, China, United States sources: National Institute for Statistics and Economic Studies (population, jobs, companies); PRE/AFI (foreign investments); French Ministry of Higher Education and Research (research); French customs (imports, exports), CRT (tourism); Grecam (real estate); ORIE (office) In France, the Paris region represents 23% of jobs 19% of the population 31% of GDP France i.e 6.2 million jobs source: National Institute for Statistics and Economic Studies i.e 12.1 million inhabitants i.e 642 billion

5 Note rapide #6 May 2017 b of International Exchanges Brie-Comte-Robert at the heart of the green revolution (construction, transport or eco-industries) as in other economic sectors (automotive, digital, consumer goods, etc.). Sénart nnovative The circular economy, which is still Provinsat an experimennangis Logistics tal stage in the Paris region through 87 initiatives, Melun is likely to gain more and more momentum. nebleau Diversification of jobs and growth Montereau-Fault-Yonne in self-employment Over a 10-year period ( ), non-salaried employment (self-employed workers and employers) accounted for 40% of the employment Nemours gains. This trend is linked to new work organisation 0 20 km methods and to the fact that companies, thanks to digital technology, are encouraging entrepreneursources : Map, IAU îdf- Development ship, loosening the links between the workplace Master Plan and work itself, fostering the need to socialise in third places, etc. In addition to this major trend, the soaring rise in business start-ups is also due to the crisis: starting your own business enables you to create your own job. Another recent trend: the number of salaried employees decreased significantly between 2008 and 2013 (-47,000). This is specific to the Paris region and has been emerging in a context that favours the creation of the most qualified jobs. The number of executive jobs has continued to increase: +121,800 between 2008 and 2013, whereas the number of worker jobs has continued to decline (-41,000). Employment trends between 2008 and 2013 Employment trends between 2008 and 2013 in the in the Paris region Positive trend +121,800 Negative trend +24,300 5% 5% 29% +24,300 27% Balance of jobs Share in total jobs 26% +21,000 Employees Small employers, self-employed 13% Executives In spatial terms, economic activity is considerably more concentrated and polarised than the residential function: 93% of jobs and 96% of office space that provide work and workspace for 89% of the population are in the central agglomeration. Paris and the 19 largest municipalities account for 50% of regional employment. After some spacing out in the 1990s, the spatial organisation stabilised in the 2000s due to the dynamism of the inner suburbs. The economic crisis has had great spatial repercussions. By causing property prices to fall in the centre of the Paris region, the crisis had a windfall effect on economic activities there, which benefited from access to better resourced locations and at lower prices. This trend became more marked when some major property developments were completed and delivered in the heart of the agglomeration. However, the economic crisis is not the only explanation. Changes in the productive system accelerated the flourishing of companies that favoured urban areas when deciding where to locate. The development of the Silicon Sentier district and the massive increase in hosting capacity for start-ups and entrepreneurs in new central urban locations such as the Cargo or l Usine IO in central Paris perfectly illustrate this. The digital society needs urban life to thrive and grow. Since the beginning of the 2000s, stimulated by the factors reviewed above and by unprecedented spatial transformations, the inner suburbs have experienced an increase in employment greater than that of the Paris region and of the outer suburbs, a completely new development. Thus, the inner suburbs represented over half (55 %) of employment gains between 2007 and The development during this period of districts and municipalities located to the east and north of the Paris agglomeration helped reduce the imbalance with the west of the agglomeration. Workers ECONOMIC, SOCIAL AND ENVIRONMENTAL CHALLENGES Intermediate occupations & technicians source: National Institute for Statistics and Economic Studies BUSINESSES ATTRACTED BY THE CENTRAL PARIS AGGLOMERATION -47,000-41,000 On the level of the Paris region, various economic, social and environmental challenges emerged in 2016: the need to enhance the performance of the Alain Rotbardt/IAU îdf Coulommiers Gilles Monge Sustainable City & Leisure Activities Paul Lecroart/IAU îdf Meaux

6 SEPTEMBER ISBN /en Note rapide #6 May 2017 Spatial organisation and project s areas Persan Mantes-la-Jolie Houdan Rambouillet Areas and hubs Economic polarities Seine Gateway Cergy Nanterre Central Business District Paris la Défense Bobigny Digital & Creative Industries Paris Créteil Versailles Paris Biotech Valley Paris-Saclay Orly Paris Dourdan Étampes Évry Hub of International Exchanges Sénart Innovative Logistics Melun Fontainebleau Sustainable City & Leisure Activities Brie-Comte-Robert 0 20 km sources : Map, IAU îdf- Development Master Plan capital-city region; the need to adapt to an unstable economic climate; to improve the link between wealth and job creation; to reduce unemployment and poverty in order to diminish social and territorial inequality; to provide a better quality of life (housing, amenities, healthcare, mobility); and, finally, the need to reduce dependence on energy and resources and to cut the production of waste. On an international level, the major challenge is that of attractiveness. It is necessary to assert the economic positioning of the Paris region more strongly in response to the initiatives taken by the large recognised metropolitan regions, such as London or New York, but also by new entrants such as Berlin, Dubai or Shanghai. These regions have greatly invested in innovation and directly threaten our established positions in many more traditional sectors, such as leisure and business tourism, the luxury sector or urban services. 11 IDENTIFIED CHALLENGES To improve the overall situation of the inhabitants of the Paris region, notably regarding employment, the study identifies 11 challenges organised around three priorities: supporting the adaptation of the economy to major transformations; maintaining a diverse and competitive regional economy; and building economic development rooted in the various areas that make up the Paris region. These challenges concern numerous fields of investigation for the future regional economic, innovation and international development plan (SRDEII, see box on p. 2), namely: territorial marketing, quality of life, research and innovation, networks, experimentation, training, infrastructures, commercial real estate, etc. They also show that initiatives taken on the right territorial scale within the Paris region, as shown on the above map, can become drivers of economic development of the capital-city region. Needless to say, the Greater Paris project also has a major role to play in the transformation of the Paris region and the enhancement of its international attractiveness. Nemours Meaux Nangis Coulommiers Montereau-Fault-Yonne Provins RESOURCES Ayache C., Castel J., Singier S. (Cap Digital), Camors C., Soulard O., Thépin D. (IAU Ile-de-France), The digital transformation of the Paris Region s economy, Note rapide Economy, n 687, IAU Ile-de-France, June Camors C., Lopez C., Jobs and occupations in the green economy: a multiple reality in the Paris Region, IAU Ile-de-France, Global Paris, profiling the Ile-de- France Region competitiveness and connections, a joint project of Brookings and JPMorgan Chase & Co, and the support of the IAU Ile-de-France. Key Figures 2017, produced by Entreprises, the Paris Ile-de-France Regional Chamber of Commerce and Industry and the Planning and Development Agency (IAU Ile-de-France), March Soulard O., Research and innovation in the : achieving global excellence, Note rapide Economy, #5, IAU Ile-de- France, February Thépin D., Vinette T. (IAU Ile-de- France), Paugam O. ( Prefecture), Data centers in the : constrained growth?, Note rapide Economy, IAU Ile-de- France, March DYNAMICS OF THE PARIS REGION ECONOMY This entire report is downloadable on the IAU Ile-de-France website. Pascale Leroi, economist Under the responsibility of Vincent Gollain, Head of the Economic Department 1. Insee, Estel, total employment. HEAD OF PUBLISHING Fouad Awada HEAD OF COMMUNICATION Sophie Roquelle EDITOR-IN-CHIEf Isabelle Barazza MODEL Olivier Cransac GRAPHICS - CARTOGRAPHY Pascale Guéry MEDIA/PHOTO LIBRARY Claire Galopin, Julie Sarris PRODUCTION Sylvie Coulomb TRANSLATION Iain Whyte MEDIA RELATIONS Sandrine Kocki sandrine.kocki@iau-idf.fr IAU Ile-de-France 15, rue Falguière Paris Cedex ISSN ISSN online www